Capitalsynthesis

Weekly Technical Analysis – “Watch SP500 Support 2625” 15th Dec17

Holiday season is upon us and the seasonal strength shines through.

After the strong momentum and renewed breadth we have seen on US equities there were clear signs of higher highs yet to come and sure enough we have seen that continuation set up. World equities have bounced but yet to have a clear signal of a mean reversion close trade, lets see. The US$ continues to chop and frustrate a little. Commodities and precious metals have bounced but like the world indexes yet to show clear signals of a new wave higher.

Apologies on the delay of posting this. Christmas holiday season appears earlier every year and Ive traveling half way across the globe with annoyingly broken or very poor wifi. We are in the count down to end year numbers and now a contest between 2016 or 2017 which is the stronger set of year end nos . For me so far, yielding defensives have been the surprisingly strong outperfomer, with two weeks to go.

Here the Swiss team’s latest:

wklytech-12-12-17

And here GS with their now famous technical work, “charts that matter”.

GS-ctm-14-12-17

Chop chop..

And here Fitzpatrick with his usual annual 2018 Outlook score card of 2017.

CB-2018Outlook

All the best guys

Rich

Weekly Technical Analysis – “Too Early to Call SP500 Top” 8th Dec17

Another busy week of price action with the continued themes of US equity strength vs rest of world equity weakness alongside commodity weakness.

As expected after last week’s price action the guys have changed their call as regards to the probability of a very near term top on some US lead cyclical themes. There is surprising technical strength in this bull market which indicates we in store for another wave higher on the under performing non US equity risk sectors. It is, at the least, a tactical positional trade, as commented here.

And here from the guys this week:

“Generally, at least tactically, a healthy market breadth is bullish since without a divergence in this indicator, it is unlikely to see a major top forming. So implicitly, we can see a short-term pullback but all in all we should still see a higher SPX into Q1.”

As regards to the intact breadth indicator on the sp500 being stocks above 200 dma non confirming the higher price high this also overturned with breadth on the sp500 breaking out to the best levels since Feb which was also confirmed by a powerful wave of price momentum. We have plenty more to run on this wave 5 it seems.

To be clear this doesn’t make the guys “wrong”. It means only that the probability didn’t play out on this occasion. Even if the probability was as high 80% chance this means you could easily be wrong four times in a row on a call. Over time the probability would of course play out and so the run of consecutive winners would come. This is all this means. And crucially the guys amend their models accordingly.

Here the guy’s latest:

wklytech-05-12-17

Great report and useful tactically re wave C Europe, wave 5 move HUI gold miners, gdx etc.

The guys are sticking to their bearish calls on the UST forecasting 2.8 to 3% for early next year. By nature, as the Fed are not signalling over night rate increases to that degree, a healthy looking yield curve, for now. This set of events implies a very powerful cyclical sector out performance and high momentum move. Given the technical indicators above flashing confirmation of the price moves this all signals a generally ultra bullish market to sustain for a little while yet, near term tactical US equity consolidation/weakness aside.

Here Cs with their truly great technical multi asset multi market report :

cs-mm-8-12-17

There are too many charts to comment on individually here but in my opinion they absolutely nail these various instrument’s charts including the macro charts. The risks are clear and we can see this as a developing mature wave five risk move. Within this wave 5 we can see with the technical evidence above however that we only mid or perhaps two thirds of the way into this wave 5. This is all instructive stuff in terms of informing us to gradually start to unwind illiquid assets perhaps ie office reits etc especially as defensives vs cyclicals are likely to peak very soon if not already.

Here the GS team with their famous charts that matter weekly:

GS-ctm-8-12-17

Some bold trading calls here several of which may have been over turned by today’s price action indeed inc the dax conviction 3 short. I am long not short off the support in a bullish chart in a ultra cyclical index.

Here Fitzpatrick from last week with a cut down report focused on the US$ index.

CB-wklytech-01-12-17

Next week I’ll release Fitzpatrick’s 2017 review and 2018 Outlook.

Here finally a US equity bottom up tech report on major US equities from UBS:

UBS-051217

Stick to the cyclical themes. We can see many tech stocks have already reversed the sharp drops. And if the guys are correct at we see a healthy yield curve albeit with higher yields across the curve expect the finance sector to fly. I entered BAC at circa 24 a few months ago. Id expect much much higher levels if the yield curve spreads remain healthy and elevated.

Goldilocks it seems, for now at any rate. Its a human condition to want to believe in magic. And that wasn’t an intentional referral to BTC but it may well have been.

All the best guys

Rich

Weekly Technical Analysis – “Rising Selectivity in Global Equities” 30th Nov17 V2

Rising selectivity in global equities is correct but nonetheless with ever higher highs in major US indexes. And whats more, in the last few sessions, we have significant price moves as lead cyclical indexes of transports and banking have price confirmed the fresh price breakouts. We have to acknowledge there is now plenty of confirming price momentum indicator scores across US risk. We should also note that the recent moves have seen much better breadth and many of the 200 day cross overs have been a false breakdown signal. Unless an immediate reversal, this is now mid wave 5 rather than end wave 5 price action here and this is meaningful in terms of providing a buy signal for non US correlating indexes like DAX for a mean correlation reversion move.

This current global equity selectivity is normal during a wave5 move. If you are frustrated that you are not achieving ever higher highs on your account p&l don’t worry, you will not be alone. This is exactly the normal wave 5 phenomena.

The guys are back from holidays and travel with an important full report though unfortunately missing the last few sessions of price action. We have a now confirmed high momentum, good breadth breakout here on US indexes which should broaden to global equities in spite of a weakening of the US$. Dax, Hangseng trading positional buys around these levels as this appears simply now a wave five chop up on peripherals.

The 2.8% yield on the ust appears now off the table for 2017 and moved to q1 2018. European high yield junk bonds yielding 2% annually. Given historic default ratios inc even -1std from the mean the yield is negative. Congratulations ECB for destroying risk pricing so effectively. Two weeks ago Whirlpool, the washing machine company, with her shares at new 1yr lows issued, BBB rated, ten year paper with a 1% yield coupon!

FX wise the crucial direction of the US$ remains on the table, US$ weakness supportive of US cyclical risk whereas US$ strength is supportive of international cyclical risk. Having said this all cyclical risk is positively correlated. From the guys here on the US$:

“A break of 95.15 would be a huge game changer and imply that a major US Dollar comeback is underway with huge implication for the macros side since this would be clearly bearish commodities and Emerging Markets.”

Given the lead nature of US risk, a confirmed price trend of a rising US$ together with a flattened yield curve would be the final bricks in the indicator wall to complete the end wave five price risk moves. This, together with sentiment, selectivity and price patterns on lead indexes would complete the early indicator work of a trend change direction for price across risk markets. Finally price would need to confirm before a truly directional rather than hedging trade could be placed. This by my practice. From a global multi asset perspective the us equity indexes have been a + beta if not alpha on a relative basis over the last 8 years or so. The prospect soon of taking profits across these equities ahead of a renewal of the US$ cash would add another wave to the relative out performance gains. That would be a sweet scenario indeed.

To the reports:

wklytech-29-11-17

And here the CS MM tech report that we ran last week

cs-mm-30-11-17

I’m totally with the CS guys here again. The one trade giving me a problem at present is the GBP. The macro news been supportive most recently at a key area of the chart. Vs USD and Euro the GBP is at a pivot area. She promises so much to the down side and there are so many reasons to be bearish but price is not supporting here and now. A trade size adjustment would be the first move. Alert to the chart here. CTFC shows no longer a net short fx candidate. Not particularly long either so a classic pivot area/chop zone.

We have to stay nimble and opportunistic in my opinion here guys. I look forward too next weeks update with great interest as to how these latest moves affect the team’s timing and projections.

For now we have this continued cross asset melt up. The longest consecutive run of higher highs for 22 years today on the Dow and whats more now no clear technical signals of this ending soon. The Goldilocks scenario of cyclical and defensive, junk bonds and treasuries all rising in this mega wave of global liquidity pumped in via the central banks. Growth and yield are given equal merit by global capital. Its a very unusual situation this one.

Finally here to kick off the start of the 2018 forecast reports, GS with their 2018 Outlook.

GS-Outlook2018

A very positive outlook re growth but with rising inflationary pressures due to the globally closing output gap. Grant’s latest interest rate observer report also gave a cautionary tale of the 1960s onset of the inflationary wave from a similar positive macro starting point.

We all know the positive and inverse correlations that inflation brings to asset classes i’m sure. 2017 may, in hindsight, prove to be the tipping point in the battle between the deflationary gorilla and inflationary dragon though there is little price evidence to support this case in any bond markets as yet.

All the best

Rich

Weekly Technical Analysis – “$ Recovery Over/Flattening Yield Curve” 23rd Nov17

Hey guys,

Another week rolls by with US equities maintaining their perpetual drift up style, ever narrowing bull market. Once again fresh price highs with very weak breadth again and with cyclical lead indexes providing non confirmation also. This appears to conform to all the classic text book end wave 5 scenarios with all risk being bid up but the number of stocks narrowing as broad indexes rise. (Another good year for index trackers as opposed to stock pickers appears likely in great part to this selectivity).

Lead cyclical risk like the transports, Asian indexes and some cyclical euro indexes like the Dax are seeing significantly more volatility in recent weeks. They have generally scored a good bounce in the last week and both Singapore and HSeng scoring new highs but the volatility is increasing with China as the volatility alpha. Commodities also scoring a bounce as the macro data remains positive and we look for direction across the $ basket.

As the team are on holiday lets take a look at a competing team’s work technical here across risk markets.

Here the CS team’s latest from yesterday:

CS-wklyMATech-23-11-17

The CS team here using a more classic set of price patterns together with chart trend skills and historic correlations to draw their conclusions. But they therefore miss the longer term cyclical and Elliot wave analysis that the UBS team include. My work actually therefore has a better fit with the CS team and as i look across the various asset classes I have almost perfect fit the CS team. A little too early to call the top here on commodity assets like copper yet for me and I did add to my Gold positions recently also.

Here Fitzpatrick rightly covering the flattening yield curve that i mentioned in last week’s report.

cb-wklytech-17-11-17

Traditionally the 2,10 spread a lead indicator for asset markets. We are not an pivot point as yet but we are getting ever closer it seems (dovish comments from the fed this week aside).

Seasonally we are heading into a positive period so this drift up could continue with non US assets taking over the beta even if the US$ drifts lower 2006 2007 style.

More to come guys as a V2.. The swiss team next week!

All the best guys

Rich

Weekly Technical Analysis “Short Dax, Nik225” 15th Nov17

We appear to have a market again here with prices rising and falling in a normal manner as opposed to the prior drift ever upward of recent months.

Whilst the main US equity markets continue to see low volatility moves, price continues to be close to all time record highs, volatility is increasing and price is becoming contested. Within its sectors the key transports have fallen by 7% or so. The only major sub index that has scored a recent breakout has been the defensive sector index which is often used as a mild risk off home for excess institutional cash.

European indexes have been the beta (in this case negative beta) again to the US, even US$ adjusted. There is mounting evidence that the top of their wave five is in across broad indexes like the eurostoxx50 to individuals like the dax30. A decent bounce from these supports here looks likely but appears a high probability of failure to achieve a higher high. From failed moves come fast moves so on the attempt failure that would be trigger a short sell candidate by my practice. (Note the conviction 2 short sell from GS below). The ftse100 has lead the weakness and is one of the first indexes to have already scored a move below her 200 dma. No death cross quite yet (50 through the 200) but its on the radar.

Asia is weakening also with the Nik225 has scoring an impulsive wave downward from her near vertical wave five. Again, as above a bounce appears likely first and then another GS conviction 2 short sell target. The hang seng price holding up and correlating well with US major indexes, for now.

Commodities have seen a continued price drift downward. As issues like copper scored a recent price breakout momentum is likely to rejoin rather than continue to drift lower in one wave. (GS conviction 2 short). Precious metals await some direction in inflation expectations as well as the US$ basket. The chart has the potential for either direction at present.

Fundamental wise for a moment, note most recent china pmi for Oct17 at 51.6 ie only just in positive expansion, month on month GDP scored negative 0.1% for Canada in August and Industrial production has turned negative in Japan. Escape velocity has seldom looked like this?

Noteworthy that the 10yr minus 2yr spread narrowed again to 0.69% as of yesterday. Not yet in a bear market trigger territory but 0.3% would be setting off plenty of cyclical risk alarms among institutional managers.

FX wise the majors continue to look for direction here. (CFTC report via scotia below showing the neutral stance across the majors, jpy aside). When will the US$ bull resume? -8.5% for the year. When will the eurgbp trend resume. The euro can finish the week strongly to push a little higher she will attract large inflows as price and momentum indicators will have been triggered but if she softens here yet more price chop beckons.

The Swiss team are traveling and also taking a holiday so the next update from them wont be until the 28th of nov.

Here GS with their charts that matter weekly tech report:

GSCTM_2017-11-12

And here their release from last week:

GSCTM_2017-11-05

And here Fitzpatrick still banging the table on Oil:

cb-wklytech-03-11-17

And here Scotia on the cftc:

scotia-cftc-14-11-17

Note the JPY shorts (that i was a part of targeting a potential Eur breakout) have likely mostly been knocked out vs the USD at least. The Euro breakout still in play but has lowered conviction and therefore size due to the risk off moves as above.

Here finally a note on rates. The 2,10 spread the traditional indicator.

NedDavis131117

For my book a small draw down the last week or so especially as Euro measured, given some euro strength here again. We also have had a bit chop on fx as we look for direction. I hold some Sp500 shorts and eurostoxx50 shorts in the money at present. They are partial hedges for longs only at present. I remain short biased GBP as the major carry target. The gbp vs major pairs charts promise much, for the patient.

Depending on the price action more next week. The first report from the guys 28th or 29th Nov.

All the best guys

Rich

p.s. Bitcoin. I’m wondering, in spite of the thin order books, gaping price action, large spreads and unregulated mkts, (allowing front running of the multitude of pi funds out there, btw), to start a technical analysis of the instrument. For technical traders inc chartists and candle price traders etc the instrument is dream to trade, across timescales. Accepting all of the above and many more outstanding issues.

Weekly Technical Analysis – “4 Month Cycle Top in Sight & Europe in Wave 5” 2nd Nov17

Another week rolls by and its been the theme of continued world equity mkts strength. Rising US$ rates expectations and a small jump in inflation expectations. Asia continues to out perform and the Eurostoxx50 hits her 2014 resistance level and FEZ (eurostoxx50US$) scores another breakout higher high of this trend.

Ill leave the equity detail to the guys this week as its a pretty thorough report from the team. But just to add US finance continues her breakout alongside the vertical soxx. Transports are weak and providing non confirmation as the team rightly point out. Its yet more of this low volatility trend continuation of which has existed for several months now. The cyclical trade remains in motion but the narrowing is evident.

FX wise the GBP has been the currency to borrow and she has put in very bearish looking patterns again vs the euro and the US$. The US$ needs soon to breakout vs the JPY if that carry is to be sustained.

Commodities are maintaining the correlations to inflation and the US$. We have no confirmation, as yet, of a top of the recent price moves.

And what of the new currency in town ie Bitcoin? Technically she continues to trade very nicely for price candle traders and chartists. The bull flag of the last few weeks was broken Sunday. The momentum in the instrument is immense. News flow wise the CME have announced futures to be launched soon. This makes Bitcoin a part of the financial markets and there fore can be considered a valid trading instrument. Whether she is an investment asset class in her own right im not so sure but the wait to test this may not be long. Once an asset starts to become widely traded her role in markets will become quickly apparent. Timing wise its worth noting that only 18000 people own 63% of all bitcoins. Its a very thinly held market at present!

Here the Swiss team:

wklytech-1-11-17

And here GS with CTM:

GSCTM_2017-10-29

The conviction 2 trade eurgbp in trouble after today.

Here Louis Capital, bullish copper:

Louis-301017

And here UBS with the ground up US equity technical review:

UBSequities-021117

For my book, once again, new record highs this week. Its been a great bull market and if you get the carry right its even sweeter than great.

All the best

Rich

Weekly Technical Analysis V2 – “Divergences in Out performers, Watch Transports” 26th Oct17

Another week rolls by with sp500 price at almost the identical level she closed at the week before. Volatility has risen a little however with a reversal price bar but no follow through as yet. Lead cyclicals like transports, soxx, tech and finance either not achieving much change or slightly down. World indexes are also down generally on the week with the exception being the European indexes that are generally higher due to the eurusd issues as below.

Today the price action however has potentially thrown a curve ball here and its meaning needs to be considered, digested and acted upon. The issue for macro allocators, after today, is the DXY, across the major crosses vs the usd but especially the eurusd. The next few days will seal the near term trend for the DXY and this trend is always meaningful for all risk markets.

There are some indications emerging here that, across asset markets whether that be equities or currencies or commodities, we seem to be ahead of where we thought we would be at this point in the calendar. With the implication that we are closer to the end of wave 5 than we previously thought.

The prior cftc report showed the positioning for some more euro strength and at least a test to regain the prior price resistance levels given the prior momentum. Having said this many other major pairs were already showing a change of trend like the usdsgd and usdcad audusd etc. The pressure was on the euro today and it failed. This cyclically raises all sort of questions for commodities or the inverse correlations to the US$. It also brings forward the Fitzpatrick and UBS team’s projections for a renewal in US$ strength. It also may provide more fuel to european equities to extend their tactical gains whilst providing a headwind to US cyclical equities. Also meaningful for US$ peg risk markets like the Hangseng.

Having said the above here the Swiss team’s latest:

wklytech-24-10-17

Note their projections for the DXY and note the closing of the spread between the 2 and 10 yr treasuries. If she closes too steeply we will get a reaction across risk, guaranteed.

Here GS with a few of their most recent CTM weekly reviews (A big thank you to our contributor for the updates) :

GSCTM_2017-10-08

GSCTM_2017-10-15

GSCTM_2017-10-22

And here last weeks cftc review.. though note another release tomorrow (but pre today’s significant fx moves).

cftc-oct17

Was a busy day today juggling FX as the day ran on. If you run multiple positions being sufficiently quick to react to events is a key challenge. If this is the start of a renewal of US$ strength my book is over allocated commodities and US$ assets and euro cash. The re-balancing is in process but today’s move was fast it only allowed a handful of trades before price became so over bought trades were unwise. Tomorrow is another day.

Here Miesels

Meisels-201017

Here showing the trend levels eurusd (in just one day the level has got much closer)

Currently working at my home in the mountains between Spain and France. Beautiful autumn days here which i look forward to enjoying this weekend. Where ever are have a great week guys.

All the best

Rich

Weekly Technical Analysis V2 – “Sp500 Losing Momentum & Vulnerable” 19th Oct17

The drift on up has continued across global equity markets with a consecutive 13 day straight run of higher highs for the Nikkei. The first time this has occurred for nearly 20 years since 1998. Whoever thinks you cant make nominal prices rise via monetary means was clearly on the wrong side of that trade.

US & European equity technical comments as follows:

“A very tight trading range and very low volatility is defacto exactly the opposite of market

nervousness and high volatility. In this context, we see the 10-year low in the average true range in Europe and the very low reading in the US as just another short-term warning signal that the market is simply too complacent, which is something we normally see ahead of important tactical tops or minimum prior to important tactical tops.”

Given these comments its interesting that the guys do not forecast a more severe setback here. Tactically for my book I am a buyer on reasonable retracement here, only. (A sharp and hard technical sell off is not my base case but I’m alert to the possibility).

Its a strong report from the guys with indications of a close at hand major top in the transports as a lead to weakness in the major indexes to come. Also a forecast of limited upside in copper to come. The start of the “topping out of the reflation trade into Q1 2018”. To be clear the guys are maintaining their general bullish bias but they raise several storm clouds on their forecasts here that needs to be noted.

For my book the call is very early as the price action in copper has been fairly compelling achieving a breakout of her bear trend and the new recent price highs were achieved on excellent momentum. Tactical weakness, yes certainly but medium term the instrument has at leas a few attempts on these recent highs “in the tank” due to the technical momentum she has received. Its way to early for me to call a top in copper or the transports for now but we need to watch for these early indicators of weakness, certainly.

Rates are clearly a key market indicator for risk assets. (See Fitzpatrick’s latest below). The guys forecast of the ten year to be at 2.8% in the run up to year end is a strong forecast and would provide a bearish backdrop to risk so correlation wise we would really want to see inflation expectations be rising strongly in parallel with rising rate expectations. We do not want to see a complete flattening (or worse inversion) of the yield curve. If LEIs start fading as central banks turn more hawkish then this would really add fuel to the bears case. Needless to say a rising US$ rate environment (ie strengthening US$) alongside a falling inflation expectation would generally be a bad set of indicators for gold.

Here the guys latest report:

wklytech-17-10-17

On the Fx side of things we do appear to have a bout of US$ weakness coming here unless a FED hawkish chairman appointment spoils the technical flow. The eurusd has a good technical pattern here to at least provide the basis for an attempt on the prior recent highs. The euro has an excellent continuation pattern vs the gbp so both trades are in motion for my book for now. The eurjpy trade for now another good carry.

Here Fitzpatrick. On this occasion correctly focusing on rates again.

cb-wklytech-19-10-17

Ok, we have some rising rate action on the short end due to the possibility of a new hawkish appointment to replace Yellen and the FED’s rising baby step rate moves. But the ten yr and beyond remains pretty static and so the yield is flattening, which is not generally a bullish signal. Fitzpatrick forecasting a possible 2 yr rate of 3% and a possible ten year rate of 3%. That would not be a bullish scenario. Money velocity needs to increase here as rates rise.

On other business I see Marc Faber has been in the news for the wrong reasons with claims he made some racist comments. Marc has always provided some quick sound bites. Sound bites cant possibly contextualize the social history of any situation. They naturally polarize and simplify histories etc and i guess that’s why sound bites are so popular. True to form he commented on an email to us here at Capitalsynthesis as follows:

“If this is the only sin I committed in my life I would feel like a saint.”

Well I don’t doubt that for a moment Marc. I hope he is roll with the punches he is surely receiving right now.

The last week saw once again new higher highs for my book value. Good although tactical weakness appears baked in here and the downside has grown a little due to the lack of volatility, there is little basis for large shorts at this point. Therefore its a minimize leverage type scenario rather than hedge for now as uncomfortable as i am with this. The latent technical strength remains in the medium term.

All the best guys

Rich

Weekly Technical Analysis – “US Mkt Overbought, Bullish Reversal Gold” 12th Oct17

Its been a good week for the reflation trade with Tips achieving a good bounce and the metals once again achieving a high momentum scores. Copper leading the charge of the metals and platinum lagging. The recent Dollar weakness supportive of course.

US equities have seen a sustained bid with many cyclical sectors/indexes overbought on a sustained basis. Given the strength of this bull market wave five it was always the risk that a drift upward by price would be seen and this is exactly what has occurred. Limited signs of rotation as the lead indexes of soxx, transports, finance continue to rise with the move broadening to include industrial producers and even defensive sectors playing some catch up here and gaining a bid and momentum also. This is now a high momentum broad rally across sectors albeit fairly narrow but there is enough here to sustain this rally onward as a wave five extension. (Even NYSE stocks above 200 dma is at a sufficient level to see more extension).

September price weakness just didn’t happen even if earlier in the month the probably was for some price weakness to occur. No move is ever guaranteed. It was correct to position for some weakness in US indexes but as the weeks rolled by the move strengthened and it was correct to adjust 2 weeks ago to the shifting probabilities.

European indexes are playing some catch up here and dollar adjusted we can see the European indexes are sustaining their strong price breakout. Their US$ trend higher is maintained whether on euro weakness or strength. Hong Kong achieved a new higher high last week and has surpassed her prior 2015 high water mark as has the nik225. So positive price signals from world indexes as well as US indexes.

If we are to see a wave five inflationary melt up of all assets then we need to see inflationary expectations rise and leadership should start to be seen in commodity metals as well as financial cos due to rising interest expectations. A few months ago this appeared a less likely scenario but this on the table again. $ Copper has achieved a breakout of her bear trend earlier in the year has momentum now again and is within striking distance on fresh price higher highs which would correlate well to the reflation trade being in motion.

Without more delay here the swiss team’s latest comments:

wklytech-12-10-17

And here Meisels:

Meisels-081017

Funding wise the GBP looks a continued good funding candidate vs the EUR but not against the dollar for the next week or two. The USDJPY pair neutral for the next week or two also. Tactically US$ carry for the next few weeks. Given the overbought prices on stocks gold and copper better instruments to hold with borrowed $ than equities imo.

Here a cs chart on the eurusd:

I hope you continue to partake in this historic bull market. Of course its monetarily driven but the rights and wrongs of how it has been created and sustained should not matter to us. We should simply continue to monetize these strong technical trends.

All the best guys

Rich

Weekly Technical Analysis – “Tactically, Don’t Chase the SP500” 5th Nov17

With the Sp500 making new record highs and being joined by most of her sub indexes/sectors (Russ2000, transports, soxx, nas100, etc, Sector wise check US housing which is back on fire to the upside). We can see this increasingly selective wave five extension has not paused, September or no September and in spite of the recent US$ price bounce. The drift ever upward has sustained. The low volatility, narrow breadth, price drift upwards without corrections along the way makes for a very dangerous market going forward into Q4 and then Q1 2018. For now the party continues with the reflation trade intact again and to my mind the end cycle melt up in all assets remains on the table.

European indexes have been the more volatile + beta over the last month or so and dollar adjusted their breakout remains intact and appears ready for another move higher. (Due to the geo politics in the Iberian peninsular what should have been the + beta to the euro stoxx ie the ibex35 has become the disappointing – beta to all. An asymmetric trade on the ibex35 presents therefore as a mean reversion gap close).

For my book the FX moves have been very supportive again for the bottom line with the bulk of the carry for leverage being funded by a sterling carry most recently. Commodities producers rejoined their bullish trends a week ago or so with the underlying commodities, like copper finally getting momentum upwards back today lagging the insider buying in the producers.

I have no shorts now at present but remain more heavily allocated to non US markets for now. I need a price correction or the technical likely hood of sustained US$ weakness to increase allocation to US assets from under weight present levels. Measuring my account in euros i am seeing daily new record highs again. Its proving a very strong year following on from an exceptionally strong 2016.

Its not a cross asset melt up yet but as the ‘this is a one way bet’ mentality spreads, its getting ever closer. When the herd of dumb capital move in to liquid risk assets it will be time to get out and that’s not quite yet.

Without delay here the reports:

wklytech-03-10-17

The guys remaining near term bearish US equities but with a shallower and later pull back that anticipated. The narrow selectivity ie weakened breadth not improved.

And here Fitpatrick:

cb-29-9-17

And here the ground up US equity technical UBS report:

UBS-031017

All the best

Rich

Weekly Technical Analysis – “Tactical Top SP500” 26th Sept17

Another weeks rolls by and we certainly have got the movement in FX and commodity markets that we anticipated. The only piece of the jigsaw that is still holding back from competing the anticipated price path are US equities with their continued surprising price resilience in spite of the ever weakening technical picture.

Unfortunately i’ll be navigating the high seas, literally, for a period of around 40hrs completing a long passage where ill have poor internet. Therefore i’ll have to post the guys latest report up here now and update this release when i hit land. Apologies for this.

wklytech-26-9-17

The Euro weakness well flagged a good trade indeed for those short from the recent highs.

More to come

All the best

Rich

Weekly Technical Analysis – “SP500 Oct Wave C Oct Down leg” 21st Sept17

Asset markets remain pretty much where they were with this low volatility creep up, fixed income aside. The European market rally appears to have stalled on the Euro, for now, holding her ground vs the US$ though the fez (dollar adjusted eurostoxx50) remains constructive with momentum scored on the new highs across timescales. Tactically we have strong US sentiment once again and at contrarian levels without price momentum on US stocks, no breadth confirmation of the new highs and the US$ putting some good basing patterns across most major pairs. Tactically a sell on US equities via my methods though due to long signals across non US$ assets not a major mkt top as yet.

I’ll leave the detail to the swiss team here below as we are waiting new clear price signals.

wklytech-19-9-17

And here Fitzpatrick

cb-wklytech-15-9-17

For my book i remain long european and asian equities but short US equities, roughly at the money on the shorts with an edge to being slightly underwater at present. Im long usd vs euro and short gbps vs usds and euro.

A quick macro comment, that whether it be US$ money supply or UK wage growth the date is slipping rather than expanding. It appears as though policy makers are behind the curve on their tightening to me.

And more reports to following this evening..

Rich